If you are like most people, you have been wisely saving whatever you can toward your eventual retirement, despite your rising debts. Now that you find yourself on the brink of filing for bankruptcy with your San Antonio bankruptcy attorney, you may wonder whether you will be able to keep that money, which was intended to provide for you and your family after you are no longer able to work.
The good news is that you don’t need to worry. As your San Antonio bankruptcy attorney knows, much of what you have set aside for your retirement is exempt from bankruptcy proceedings. This means that your retirement funds cannot be garnished by the court or its bankruptcy trustees.
Exemptions Protect Filers
It is an unfortunate misconception that bankruptcy results in a court-ordered truck loading up everything you own, to be sold off to settle your debts. In fact, most of the possessions required for a normal, comfortable life are exempt from the bankruptcy proceedings. Your Chapter 7 bankruptcy attorney in San Antonio can explain more, but generally your car, household goods and personal effects are exempt from bankruptcy proceedings. Furthermore, your retirement savings are exempt, as long as they have been saved in a 401K, IRA or similar account. A Chapter 13 bankruptcy attorney in San Antonio can discuss with you which of your belongings and savings will be exempted.
Things to Consider about your Retirement Savings and Bankruptcy
Even though your retirement savings accounts are exempt from garnishment during bankruptcy, there are some major things to consider before you file for bankruptcy with your San Antonio bankruptcy attorney. First, and especially if you are self-employed, be sure that your retirement savings account has been set up to meet the qualifications for exemption. Your Chapter 7 bankruptcy attorney in San Antonio can explain those qualifications to you before you file. Many self-employed people believe that their retirement savings accounts are exempt, only to later find that the account has not been properly set up. Additionally, you must be careful not to preferentially dump money into your retirement account in the six months prior to filing for bankruptcy. This is called a “fraudulent conveyance” and could possibly result in your retirement savings account’s inclusion in the bankruptcy.